Alexander, 39, will complete his move from Lancashre rivals Burnley on Wednesday when the Clarets cancel his contract by mutual consent.
He only moved to Turf Moor in 2007 because the Lilywhites would not give him a two-year deal, he went on to become a Premier League player with Burnley.
“The squad has changed a lot since I left but I know Clarke Carlisle and Barry Nicholson and a couple of others," said Alexander.
“I know the place inside out I am not looking at the past. I have to come here to prove myself again and to prove to my team mates that I can still do it and repay the faith the manager has shown in me.”
Preston boss Phil Brown has tipped Alexander to be a big influence on the rest of the players.
“The experience of Graham Alexander will be priceless with regards to the education of the younger players in the squad," he said.
“He loves the Club and has passion for the place. When he pulls on a Preston North End shirt he will wear it with pride, which can only be a massive positive for us.”
Alexander made 400 appearances for Preston after joining them from Luton Town, whom he had moved to from the Iron in 1995, in 1999.
He began his career at the Old Showground, making 198 competitive appearances and scoring 23 goals.